December 2021 Digest

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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DOL Publishes Informational Copies of 2021 Form 5500

Among other notable changes, the Form 5500 instructions have been amended to make clear that a pooled employer plan is a multiple employer plan that files a single Form 5500 Annual Return/Report.

Source: Plansponsor.com, December 2021

Increasing DC Plan Default Deferral Rates a Better Driver of Higher Savings

A new research paper suggests that defined contribution plan sponsors should focus on increasing the default savings rate to help boost participants' retirement savings for new employees rather than increasing employer matching contributions.

Source: Plansponsor.com, December 2021

Five Questions for DC Plan Sponsors Heading Into 2022

Looking ahead to next year, there are a number of evolving issues and threats that defined contribution plan sponsors need to be prepared for, a new Mercer white paper suggests.

Source: Ntsa-net.org, December 2021

White Paper: Top Considerations for DC Plans in 2022

The memories of the last two years serve as motivation to focus efforts on the continued improvement of the financial stability and retirement preparedness of DC plan participants. Mercer believes that an approach with flexibility and participants at the center is key for plan sponsors who wish to have a resilient retirement strategy for 2022 and beyond. Here are five themes to consider as you plan for 2022.

Source: Mercer.us, December 2021

Court Enforces DOL Subpoena Seeking ERISA Plan's Cybersecurity Information

A district court has enforced an administrative subpoena issued by the DOL seeking an ERISA plan service provider's cybersecurity records. The subpoena is part of an investigation into the service provider after it allegedly processed unauthorized distributions as a result of cybersecurity breaches relating to its ERISA plan clients.

Source: Hodgsonruss.com, December 2021

IRS Determination Letter Program: Then and Now

The IRS determination letter program has changed over the years, but it remains an invaluable benefit to plan sponsors that offer custom-designed tax-favored plans. Groom principals Elizabeth Dold and David Levine look back over the years at the importance of the IRS determination letter program, review the current program, and highlight the areas where plan sponsors most benefit from a favorable determination letter.

Source: Groom.com, December 2021

What to Keep on Your Radar and a Wish List for 2022

2022 promises to be a significant year for employee benefits. 2021 set the stage for some major developments in the year ahead. Here are some things to watch out for and to hope for in 2022.

Source: Cohenbuckmann.com, December 2021

DOL Releases Form 5500 Revisions for Multiple-Employer Plans

These final revisions are a follow-up to the proposed revisions released on September 15, 2021. Additional changes from the proposed revisions will be addressed in separate notices issued by EBSA at a later undetermined date.

Source: Ascensus.com, December 2021

Ten Signs of 401k Contribution Fraud: DOL

While far from a widespread problem, an anti-fraud campaign by the DOL nonetheless uncovered a small fraction of employers who abused employee contributions by either using the money for corporate purposes or holding on to the money too long. To help combat the issue and keep participants informed, here are 10 warning signs that 401k and other retirement plan contributions are being misused, courtesy of the DOL.

Source: 401kspecialistmag.com, December 2021

Most Common 401k Default Deferral Rate No Longer 3%

Perhaps the most interesting finding in the recently released 64th Annual Survey from the Plan Sponsor Council of America is that 3% is no longer the most common default deferral rate for automatically enrolled 401k plan participants. For the first time, 6% is now the most common deferral rate.

Source: 401kspecialistmag.com, December 2021

Transitioning From DB to DC: What You Need to Know

The transition from DB pension plans to DC options may require participants to become more informed about their retirement decisions. Given this trend, it is becoming increasingly important to offer a variety of financial/retirement planning benefits to ensure that your plan participants are making informed decisions to ensure adequate retirement security.

Source: Ifebp.org, December 2021

IRS Adds FAQs on In-Service Distributions, Rehiring Retirees

The IRS added answers to some frequently asked questions on whether rehiring a retiree causes the employee to lose bona fide retirement status. It also issued some FAQs on in-service distributions to individuals who continue to work.

Source: Hallbenefitslaw.com, December 2021

Process Prevails in ERISA Excessive Fee Victories

These cases provide a useful guide for the type of evidence needed in ERISA breach of fiduciary claims and likely variants. First, plan sponsors should establish the right processes and operational compliance practices providing evidence of a thorough investigation and independent validation of procedural and substantive process standards to demonstrate that plan fiduciaries have acted prudently. Next, plan sponsors should document discussions, advice, and reasons for decisions, in detail.

Source: Gtlaw.com, December 2021

A Visual Depiction of the Shift From DB to DC Plans in the Private Sector

This 3-page report from the Congressional Research Service illustrates the shift from defined benefit plans to defined contribution plans that has taken place in the last 40 years.

Source: Congress.gov, December 2021

Form 5500 Revisions Implement PEP Filing Requirements

The DOL on Dec. 29 unveiled final revisions to the Form 5500 and the Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan. The revised forms are to be used for reporting concerning the 2021 plan year and include changes that apply to pooled employer plans.

Source: Asppa.org, December 2021

The Impact of Employer Defaults and Match Rates on Retirement Saving

This study evaluates the interaction between employer match and default rates on savings outcomes among new employees. Selecting a higher default rate has the largest impact on employee savings rates. Plans with low default rates that match a high percentage of employee earnings induce higher-income participants to actively move away from the low default savings rate, resulting in a wider savings gap between higher- and lower-income employees. When default savings rates are set higher, fewer employees move away from the default resulting in higher and more equal savings rates. Additionally, there is evidence that higher default savings rates increase usage of plan default investments.

Source: Ssrn.com, December 2021*

Is Biden's EBSA Nominee Doomed?

Despite advancing through the Senate committee process in early December, President Biden's nominee to lead the EBSA may be in jeopardy. The Senate Health, Education, Labor, and Pensions Committee approved the nomination of Lisa Gomez to serve as Assistant Secretary for EBSA at the Department of Labor on Dec. 2, on a near party-line vote of 12-10. But the full Senate has not acted on her nomination, and before adjourning the first session of the 117th Congress for the holiday break, Gomez was among several nominees whose nominations will not be allowed to carry over into the second session.

Source: Napa-net.org, December 2021

Another Swing in DOL Investment Position

Reminiscent of the DOL's about-face on ESG investing by ERISA fiduciaries, on December 21st the DOL issued a "supplemental statement" on its view of the use of private equity investments in participant-directed retirement plans, such as 401k plans.

Source: Beneficiallyyours.com, December 2021

Why Plan Sponsors Must Address Cybersecurity Now

With cybersecurity threats getting increasingly sophisticated and costly, plan sponsors can no longer afford to wait to address the threats to their retirement plans. In a Dec. 16 webinar by the Plan Sponsor Council of America, Daniel Aronowitz, Managing Principal with Euclid Fiduciary, and David Levine, Principal at the Groom Law Group, walked webinar participants through the different types of cyberattacks, as well as recent regulatory, legal and industry developments and how plan sponsors can protect themselves.

Source: Asppa.org, December 2021

Dismissal Motion Fails in Natixis ERISA Lawsuit

The U.S. District Court for the District of Massachusetts has denied a motion to dismiss a lawsuit filed against Natixis Investment Managers and its retirement committee. The lawsuit, which can now proceed to discovery, claims the defendants breached their fiduciary duties to the company's 401k Savings and Retirement Plan, in violation of ERISA.

Source: Plansponsor.com, December 2021

Plaintiffs Refile ERISA Complaint Against Prudential

The plaintiffs in an ERISA lawsuit filed against Prudential -- which was subsequently dismissed -- have submitted a second amended complaint to the U.S. District Court for the District of New Jersey. The original lawsuit was dismissed in September "without prejudice," meaning the plaintiffs were given time to file an amended complaint.

Source: Planadviser.com, December 2021

DOL Rolls Over Relief for Investment Fiduciaries Into 2022

The DOL recently issued year-end relief to investment advice fiduciaries with its release of Field Assistance Bulletin No. 2021-02 on October 25, 2021. Previously, the DOL adopted Prohibited Transaction Exemption 2020-02 on December 18, 2020, which set forth several requirements that financial institutions and investment professionals must satisfy when providing fiduciary invest. advice, including advice to roll over a retirement plan account into an Individual Retirement Account. Although PTE 2020-02 became effective February 16, 2021, interim transitional relief delayed its effective date through December 20, 2021. The Notice further extended transitional relief to as late as June 30, 2022.

Source: Olshanlaw.com, December 2021

Latest Regulatory Agenda Offers Few Surprises for Retirement Plans

This article highlights some of the retirement plan items on the updated agendas for the DOL's Employee Benefits Security Administration, the Internal Revenue Service, and the Pension Benefit Guaranty Corp., but omits some routine items. While the agendas often specify anticipated completion dates within the next year, those dates are generally aspirational.

Source: Mercer.com, December 2021

Routine Errors 401k Plan Sponsors Can Avoid

Plan errors happen, but they can easily be avoided through a little diligence on your part. Routine mistakes are more frequent than catastrophic ones but plan sponsors should make every effort to avoid them. This article is about the routine errors you should avoid making.

Source: Jdsupra.com, December 2021

House Introduces Retirement Reform Bill

The Retirement Improvement and Savings Enhancement (RISE) Act (H.R. 5891) has been introduced in the House. Most all the provisions in the bill are also contained within the SECURE Act 2.0. This article reviews the RISE Act changes.

Source: Hallbenefitslaw.com, December 2021

ESG Investing for Retirement Plans: Where We've Been, and Where We Are Now

Over the past year, the regulatory backdrop around environmental, social, and governance investing has shifted. As McDermott Partner Brian J. Tiemann explains in these slides, the DOL under the Trump administration dropped ESG terminology and set a high standard for considering factors other than purely financial projections for investment alternatives. However, the Biden administration's DOL has said that it will not enforce Trump-era regulations or pursue enforcement actions against plan fiduciaries for failure to comply with those regulations.

Source: Employeebenefitsblog.com, December 2021

DOL Clarifies Its Prior Guidance on Private Equity Investments in 401k Plans

The DOL issued the Supplementary Statement in response to concerns from unidentified stakeholders that the Information Letter could be viewed -- particularly by sponsoring employers and other plan-level fiduciaries in typical 401k-type plans -- as endorsing or recommending PE investments and not sufficiently emphasizing the risks that accompany such investments.

Source: Debevoise.com, December 2021

DOL Clarifies Guidance on Private Equity in 401k Plans

A supplemental statement released by the Department of Labor cautions that private equity investments in participant-directed retirement savings plans may not be appropriate in certain cases. The Dec. 21 statement from the DOL advises that except in a minority of situations, plan-level fiduciaries of small, individual account plans are not likely suited to evaluate the use of private equity investments in designated investment alternatives in individual account plans.

Source: Asppa.org, December 2021

Total U.S. Retirement Assets Dip Slightly in Q3

Total U.S. retirement assets were $37.4 trillion as of September 30, 2021, down 0.5% from June 30, 2021, according to the Investment Company Institute's latest Quarterly Retirement Market Data report.

Source: 401kspecialistmag.com, December 2021

401k Fiduciary Litigation: "Underperformance"

On November 16, 2021, the United States District Court for the Northern District of California rendered its decision in In Re Linkedin ERISA Litigation, granting in part/denying in part defendants' motion to dismiss. Among other issues, Linkedin involves a claim that Linkedin plan fiduciaries breached their duty of prudence by selecting/retaining an "underperforming" target-date fund. This sort of claim is being brought more frequently by plaintiffs' lawyers in 401k breach-of-duty-of-prudence litigation. This article discusses the court's decision on this issue.

Source: Octoberthree.com, December 2021

Podcast: How Small School Districts Can Offer a Great 403b

Small school districts can offer top notch 403b programs. Here are five options available to small school districts who want to offer a great 403b plan.

Source: Libsyn.com, December 2021

ERISA Requirements Calendar

Sponsors of defined benefit and defined contribution plans should keep deadlines and other important dates in mind as they work toward ensuring compliance with their plans in 2022. Dates assume a calendar year plan. Some deadlines may not apply or may have dates shifted based on your organization's fiscal year.

Source: Bdo.com, December 2021

COVID Hasn't Pushed Boomers Into Retiring

Traditionally, older workers who left a job tended to retire. But there was little indication that the people who stopped working during the pandemic saw retirement as their best fallback option. This conclusion by the researchers is consistent with the pre-COVID trend of boomers working longer to put themselves in a better financial position when they eventually do retire. Many older workers have returned to the labor force as the economy has rebounded and vaccines have become widely available.

Source: Bc.edu, December 2021

Keystone State Lays Foundation for State-Run IRA Program

Another state-run IRA program for private sector workers is in the making. Pennsylvania's Keystone Saves program will be phased in over four years; the first two years are set aside for Treasury to set up the program, including an RFP process, and to implement a voluntary pilot.

Source: Asppa.org, December 2021

Study Suggests Substantial Retirement Risks Remain

While most U.S. workers say they are saving for retirement through employer-sponsored plans or other means, a much smaller percentage say they are "very confident" they will be able to retire fully and comfortably. According to the 320-page Compendium of Findings About the Retirement Outlook of U.S. Workers from the Transamerica Center for Retirement Studies, more than four out of five workers (82%) say they are saving for retirement through their current employer's 401k or similar plan and/or outside of work.

Source: Asppa.org, December 2021

How Do We Self-Correct a Failure to Enroll a New Employee in Our Automatic 401k Contributions?

The IRS's Employee Plans Compliance Resolution System offers several pre-approved methods that can be used to correct failures to implement automatic deferrals. The standard method for correcting full-year elective deferral failures (including enrollment failures under an automatic contribution arrangement) involves making a qualified nonelective contribution for 50% of the missed deferrals plus a contribution for the full amount of any missed matching or nonelective contributions. But lower-cost methods may be available if the correction is made within specified timeframes.

Source: Thomsonreuters.com, December 2021*

Measuring DC Plan Success Requires Going Beyond Common Metrics

Greater engagement and education from plan sponsors and recordkeepers are key, but better insights into employees' retirement readiness require being able to access a greater range of participant data points, including information about personal savings and assets outside of participants' DC plans, according to retirement planning professionals.

Source: Plansponsor.com, December 2021

Voya Sued for Using Own Investments in 401k Plan

A group of former Voya Financial Inc. employees sued the company this week, claiming the firm should not have included its investment products in its 401k plan. In the Dec. 14 complaint filed in federal court in Connecticut, the plaintiffs allege the company benefited at the expense of its participants by selecting certain Voya investment options, rather than lower-cost alternatives with stronger performance records from other companies for the $2.2 billion 401k.

Source: Investmentnews.com (registration may be required), December 2021

Nokia's $8.5B 401k Held Down By High Fees, Lawsuit Claims

Nokia of America is among the latest employers hit with a class-action lawsuit over the fees in its 401k plan. The complaint levels claims that are similar to those in numerous other cases brought by litigator Capozzi Adler. The phone maker allegedly did a disservice to its workers by filling its investment menu with funds that had higher fees than other options available on the market, and the plan's revenue-sharing arrangement led to administrative costs that are well above average, according to the complaint.

Source: Investmentnews.com (registration may be required), December 2021

School District 403b Plans and Recordkeeper Selection

This article discusses the California law on the selection, by public school districts and charter schools, of third-party administrators or recordkeepers for their 403b plans. As with school district 403bs and investment selection, there isn't a lot of "law" on the books concerning California school 403bs and recordkeeper selection. But here is what the California Education Code does say.

Source: Focusonpublicbenefits.com, December 2021

Fast-Approaching Deadlines for Employee Benefit Plans

The end of 2021 brings important deadlines for employers that sponsor 401k plans, 403b plans, cafeteria plans, and group health plans. Under the Bipartisan Budget Act of 2018 and related IRS regulations, for 401k and 403b plans using the hardship distribution safe harbor there are several changes, some required and others optional.

Source: Venable.com, December 2021

DC Specialists and Their Value to Plan Sponsors

A recent Voya survey was developed to help DC specialists better understand the needs of their clients and prospects while giving plan sponsors a chance to voice their hopes and concerns. It found that plan sponsors are paying more attention to the value DC specialists bring to the table, including increased attention to plan design review.

Source: Plansponsor.com, December 2021

2022 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks, one of the more important is to make sure your plan complies with all pertinent federal legislation and regulations. This compliance calendar will help you keep track of your company's required filings, their due dates, and related details so you can avoid incurring any fines or other penalties for late filings or missing information.

Source: Plansponsor.com, December 2021

New Bill Would Allow Faster Access to Retirement Accounts After Disasters

Members of the House Ways and Means Committee have introduced bipartisan legislation that would allow survivors of natural disasters to withdraw funds from their retirement accounts for emergency expenses without fees or penalties.

Source: Planadviser.com, December 2021

Retirement Plans Are Looking More SECURE

A record number of employees are eligible for and participating in 401k plans, and employers are increasing their default deferral limits in the wake of the SECURE Act, the Plan Sponsor Council of America has found. Several factors shaped the 2020 retirement plan year.

Source: Napa-net.org, December 2021

Retirement Plans Required Year-End Amendments for 2021

As 2021 winds down, retirement plan sponsors should confirm that their plan documents are amended by December 31, 2021, to comply with certain plan changes which are outlined here.

Source: Faegredrinker.com, December 2021

Would 401k Participants Use a Social Security "Bridge" Option?

Although annuities would ensure higher levels of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with post-retirement investing, the market for annuity products is minuscule. To address this, employers could increase the availability of lifetime income by adopting a Social Security "bridge" strategy within their 401k plans. The bridge option would use 401k assets to pay retirees an amount equivalent to their Social Security benefits so they can postpone claiming benefits, thereby increasing their monthly payment when they do eventually claim. This paper gauges workers' potential interest in a bridge option.

Source: Bc.edu, December 2021

2021 ERISA/Employee Benefits Legal Compliance Checklist

A handy checklist that covers plan documents, plan operations, plan investments, and fiduciary concerns for end-of-year 2021.

Source: Wagnerlawgroup.com, December 2021

The Truth About After-Tax Contributions

The after-tax feature in a 401k plan can be extremely beneficial especially for those employees who are highly compensated. That is if your plan allows for it and employees understand how it works. Many employees are familiar with the elective deferral contribution limit but there is a lesser-known non-Roth after-tax feature that can allow participants to save additional money for retirement.

Source: Tri-ad.com, December 2021

The U.S. "Retirement Crisis" Is a Media Myth

Seemingly every day, we are inundated with bad news regarding retirement. But when we simply look at the data, a very different story emerges. Never before have so many Americans saved so much for retirement, nor had stronger incomes in old age or lower risk of poverty.

Source: Thinkadvisor.com, December 2021

Plan Sponsors Are Getting No Answers From Excessive Fee Lawsuits

Excessive fee lawsuit activity has ramped up with no major decisions by the courts; however, a pending decision by the U.S. Supreme Court in one case could impact the amount of activity going forward.

Source: Plansponsor.com, December 2021

Senators and Investment Group Push Back on DOL ESG Proposal

Different presidential administrations have been back and forth over the years about the role environmental, social and governance factors should play in investments chosen for employer-sponsored retirement plans. Now, the latest iteration of regulations proposed by the DOL is getting some pushback.

Source: Planadviser.com, December 2021

Retirement Plan Participant Claims Harm From Transamerica Data Breach

In a lawsuit, he alleges the retirement plan service provider did not take steps to protect the personal information of participants in plans it serves.

Source: Planadviser.com, December 2021

Groups Suggest DOL Take Certain Language Out of Proposed ESG Rule

While expressing support for the rule, they say removing specific references to ESG factors will help fiduciaries understand they are not required to consider them in their investment selection.

Source: Planadviser.com, December 2021

How the 2022 Cost of Living Increases May Impact Your Retirement Plan

As a plan sponsor, you know that administering a retirement plan in compliance with the tax laws can be challenging, in part because there are so many rules that govern retirement plan operations. Some of these rules are tied to the contribution and compensation dollar limits that can change each year with cost-of-living adjustments. Although an increase in the limits means that you and your employees can save more for retirement, your plan might be affected in other ways. It's important to be aware of these limits and how they interact, so you understand when additional employer contributions may be required.

Source: Newportgroup.com, December 2021

Mistakes You Should Avoid When Dealing With an IRS/DOL Audit

Plan sponsors tend to focus on the wrong things. One of the biggest dangers to them and their pocketbook is an audit by the Internal Revenue Service or the Department of Labor. Yet most act nonchalantly about it. The problem is they make mistakes and this article is all about warning you not to make them.

Source: Jdsupra.com, December 2021

Energy Firm Exelon Sued Over 401k

Law firms representing the plaintiffs cite fiduciary failures in moving to in-house funds and high fees for record keeping and managed accounts.

Source: Investmentnews.com (registration may be required), December 2021

DOL's ESG Proposal Attracts Ire From the Anti-"Woke"

The agency received a trove of public comments on its proposed ESG changes, and many were penned by people concerned about a perceived liberal agenda.

Source: Investmentnews.com (registration may be required), December 2021

Our Demographic Destiny and Why Retirement as We Know It Is Dead

The future of retirement security may depend on whether we understand our demographic future. We need to pay attention because we are approaching the "Super Age" and failing to adapt today's system to be able to meet the needs of tomorrow.

Source: Georgetown.edu, December 2021

Takeaways From the Hughes v. Northwestern Supreme Court Oral Argument

Anyone hoping for a clear indication as to how the Supreme Court will rule in the Hughes v. Northwestern case will be disappointed. The arguments were scattered and convoluted. Thus, there is no way to predict how they will rule. Most disappointing was the failure to conduct an in-depth analysis of the proper context and standard to judge excessive fee complaints. The Justices spent most of their time asking factual questions specific to the Northwestern plan, which misses the larger context of the meritless claims being filed against defined contribution plans when courts apply a low pleading standard.

Source: Euclidspecialty.com, December 2021

Five Good Reasons to Correct Retirement Plan Errors

If your business sponsors a 401k or other retirement plan, it is governed by a lengthy plan document, often a separate trust agreement or custodial account agreement, and multiple other documents. Not surprisingly, most plan sponsors get something wrong somewhere along the way, whether it's concerning the plan document or the operation of the plan. Here are five reasons why taking prompt action to correct plan errors is in the best interests of your business, and your employees.

Source: Eforerisa.com, December 2021

Plan Sponsors Eye Self-Directed Brokerage Accounts

The current environment appears ripe for self-directed brokerage accounts as certain groups of plan participants welcome the opportunity to curate retirement investments that reflect their values and priorities. By taking a fresh look at SDBAs as an investment option for their plans, sponsors will be able to harness participant enthusiasm to increase interest in and engagement with their retirement plan, according to the latest Cerulli Edge -- U.S. Retirement Edition.

Source: Cerulli.com, December 2021

Fiduciary Risk: Five Ways to Control and Reduce It

This article will help employee benefit plan fiduciaries better understand their responsibilities and manage the risks of non-compliance with ERISA requirements. The general approach to handling risk is a cycle of identifying, assessing, controlling, and reviewing controls over risks. Based on the assessment of a given risk, there are four ways to manage it: you can avoid, reduce, transfer, or accept the risk.

Source: Berrydunn.com, December 2021

401k and Health Plan Considerations for End-of-Year

As we move towards the end of the calendar year, now is the time to consider the impact of the New Year on your 401k and Group Health Plans. Here are five important items to consider as we usher in 2022.

Source: Barran.com, December 2021

December 31, 2021 Reminders for Retirement Plan Sponsors

Amendments implementing the 401k and 403b plan hardship distribution changes of the Bipartisan Budget Act of 2018 are the main amendments needed by December 31, 2021. This deadline applies to both calendar-year and fiscal-year plans. The amendments generally need to be retroactive to each provision's effective date.

Source: Segalco.com, December 2021*

Northwestern University Supreme Court Argument Analysis

Two expert attorneys who listened to this week's oral arguments in Hughes v. Northwestern University say they would "rather be in Northwestern University's shoes" than those of the plaintiffs, but the outcome of the potentially highly important case won't be known for some months.

Source: Planadviser.com, December 2021

Add Value by Helping Plan Sponsors Develop a Fiduciary Calendar

To manage their responsibilities, plan sponsors should develop procedures that facilitate prudent decision-making and demonstrate that the plan sponsor is disciplined about following those procedures. RPAs can add value to their retirement plan support services by helping plan sponsors develop a strategy for satisfying their fiduciary responsibilities under ERISA, including a fiduciary calendar.

Source: Newportgroup.com, December 2021

Judge "Unfriends" Chamber Filing in 401k Excessive Fee Case

A federal judge has rejected a "friend of the court" filing in an excessive fee case against the American National Red Cross. In late August, noting that "converting subpar allegations into settlements has proven a lucrative endeavor--mostly for the lawyers bringing these lawsuits," the U.S. Chamber of Commerce filed an amicus brief in a suit filed last March challenging the practices of the fiduciaries of the $1.2 billion retirement plan of the American Red Cross in the U.S. District Court for the District of Columbia.

Source: Napa-net.org, December 2021

Bipartisan Disaster Retirement Savings Act Introduced

The bipartisan Disaster Retirement Savings Act, introduced by Reps. Mike Thompson and Mike Kelly, who both sit on the tax-writing House Ways and Means Committee, would help survivors of natural disasters by allowing them to withdraw funds from retirement accounts to cover the unexpected and emergency costs related to disasters without incurring fees or penalties.

Source: Napa-net.org, December 2021

Getting the Most out of Year-End Plan Reviews

Year-end plan reviews are just around the corner. On a Dec. 6. Session of the ASPPA Winter Symposium, Missy Matrangola, QKA, QPA, Consultant with Atlantic Pension Services, offered ideas on how to get the most out of those reviews.

Source: Asppa.org, December 2021

Justices Settle Into Opposing Camps on Duties of Retirement Plan Sponsors

The arguments in Hughes v. Northwestern University displayed a case that presents a prosaic question of trust law, the fiduciary obligation of the sponsors that control the DC plan. The author writes, "The reactions of the justices to the case seemed to have less to do with a careful parsing of the statute imposing that duty and much more to do with the differing predispositions that the justices have about the propensity of class actions to present defendants with an extortionate compulsion to settle even the flimsiest of allegations."

Source: Scotusblog.com, December 2021

November Another Light Month for 401k Trades

The Alight Solutions 401k Index update for November has been published, showing the month was another light one for DC retirement plan trading. In fact, there were no days of above-normal activity.

Source: Plansponsor.com, December 2021

Exelon Faced With ERISA Excessive Fee Suit

In sum, the complaint alleges that the plan's fiduciaries breached their duties of prudence and loyalty to the plan and its participants by, among other things, selecting and maintaining investment options that were materially more expensive and performed materially worse than alternatives that were available in the marketplace; causing the plan to pay excessive fees for recordkeeping and administrative services; and allowing a third-party consultant to charge the plan unreasonably high fees for participant advisory services, which the consultant kept for itself or shared with another plan service provider.

Source: Planadviser.com, December 2021

Which Pocket? A Guide to Paying Retirement Plan Expenses Out of Plan Assets

The retirement plan sponsor may have the option to pay for some plan-related expenses out of the assets held in trust for the plan. This may seem like a more appealing option than paying for these expenses from business assets, but how does the sponsor determine which expenses are allowed to be paid from plan assets? This guide will explain which pocket you can use.

Source: Milliman.com, December 2021

RPAs Need a New Name to Reach the Next Level

While "retirement plan adviser" has been a good description of those who serve ERISA retirement plans, it's quite limiting to focus only on the plan, rather than the participant also. The author suggests that "financial benefits adviser" makes more sense.

Source: Investmentnews.com (registration may be required), December 2021

401k Annual Administration - A Checklist for 2022

A checklist can serve another important purpose, monitoring your 401k provider's job performance. As a 401k fiduciary, you can't simply assume your 401k provider is doing their job. You must "monitor" them to ensure they're doing a competent and timely job. A checklist can make monitoring easy.

Source: Employeefiduciary.com, December 2021

Consultant Views on ESG

The DCIIA Environmental, Social, and Governance Subcommittee seeks to explore consultants' views of ESG concerning the definition of ESG, plan sponsor and employee demand for ESG investments, barriers and levers to offering ESG investment options in the DC plan, particularly the government's role in driving or dampening adoption of ESG investment options, and typical strategies for implementing ESG in DC plans. To that end, the DCIIA Retirement Research Center interviewed 12 DC practice leaders at leading US consulting firms. This is a 4-page report.

Source: Dciia.org, December 2021

Real Estate Investments Increasing in DC Plans

A new report suggests defined contribution plan investors have grown more sophisticated in their knowledge of the real estate asset class and many are looking closer at asset-level and manager performance.

Source: Plansponsor.com, December 2021

Expect More Difficultly Obtaining Fiduciary Insurance

Increasing retirement plan-focused litigation has put insurance carriers and fiduciary service providers in difficult positions. In this article published in PLANSPONSOR, McDermott Partner Erin Turley said such litigation continues to be a "major focus" in the fiduciary insurance marketplace. "It is a challenging market right now, to the point that we are looking at trying to think about ways that insurance products might be differently structured, to address what we hope will only be a short-term tightening in the market."

Source: Mwe.com, December 2021

The Best Way a 401k Plan Sponsor Can Avoid Headaches? Hire the Right TPA

The most important step that plan sponsors can take in avoiding needless plan errors that can cost them in the pocketbook is by hiring the right third-party administrator. Here's why.

Source: Jdsupra.com, December 2021

Deadline to Comply With DOL Investment Advice Exemption Fast Approaching

If recommendations are being provided to retirement investors and fiduciaries, then an exemption strategy will be warranted to receive any compensation in connection with the advice. PTE 2020-02 was built for these types of arrangements, but it contains numerous conditions go into effect early next year.

Source: Fiduciarygovernanceblog.com, December 2021

Final Thoughts Before the Hughes v. Northwestern Supreme Court Oral Argument

The Supreme Court will hold oral argument in the Hughes v. Northwestern case on Monday, December 6. This is the most important case in the nearly fifty-year history of ERISA, as it will decide the pleading standard for accusing plan fiduciaries of professional malpractice. Northwestern may ultimately lose this battle. But for plan sponsors, it is the war on excessive fees that matters. That starts with a more rigorous and appropriate context-based pleading standard in which many meritless cases are dismissed at the pleadings stage.

Source: Euclidspecialty.com, December 2021

Supreme Court Struggles to Apply "Twiqbal" in Retirement Plan Fee Cases

The Supreme Court heard oral arguments in Hughes v. Northwestern University, No. 19-1401, just one of about 150 similar class-action suits filed around the country in the last few years. Plaintiffs appealed to the Supreme Court, which granted certiorari to address this question: "[w]hether allegations that a defined-contribution retirement plan paid or charged its participants fees that substantially exceeded fees for alternative available investment products or services are sufficient to state a claim against plan fiduciaries for breach of the duty of prudence under ERISA."

Source: Erisalitigationadvisor.com, December 2021

IRS' 2021 Required Amendments List Doesn't Affect 401k Plans

On November 30, 2021, IRS released Notice 2021-64, its annual list of required amendments for individually designed qualified retirement plans. This year, the RA List is notable in that, for perhaps the first time, it contains no provisions directly applicable to 401k plans.

Source: Compliancedashboard.net, December 2021

Cybersecurity and Data Privacy for Benefit Plans

Failing to adequately address data privacy and security will likely result in a breach of fiduciary duty claim. Knowing there is sensitive data at risk, what should employers, plan administrators and their plans do? This article contains some helpful starting points.

Source: Clarkhill.com, December 2021

ERISA Suit Dismissal Shows How Claims Can Fall Short

The district court accepted a magistrate judge's recommendation and dismissed the case based on the plaintiffs' failure to state an actionable claim regarding the retirement plan fees they pay. In recommending the complaint's dismissal, the presiding magistrate judge notes that the lead plaintiffs have invested in just two out of roughly 25 plan offerings in dispute. Despite this, the judge notes, the plaintiffs seek relief for "all losses resulting from Adidas's breaches of fiduciary duty," including losses for plans they did not personally invest in.

Source: Planadviser.com, December 2021*

Nominee to Lead EBSA Advances in Senate

The nominee to lead the Employee Benefits Security Administration has moved one step closer to being confirmed. Lisa Gomez, who was nominated in July to serve as Assistant Secretary for EBSA at the Department of Labor, was approved Dec. 2 by the Senate Health, Education, Labor, and Pensions Committee on a near party-line vote of 12-10.

Source: Ntsa-net.org, December 2021

IRS Revamps 403b Preapproved Program

Rev. Proc. 2021-37 overhauls the IRS opinion letter program for preapproved Internal Revenue Code Section 403b retirement plans, simplifying the program's structure and aligning it with the program for Section 401(a) qualified plans.

Source: Mercer.com, December 2021

Insurance Agents Busted for 403b Fraud

Non-ERISA 403b plans are still one of the stains of the retirement plan business because, without ERISA protection, they put participants at risk for high fees and fraud. In such a case, insurance agents Robert Andrew Lotter and Charles Albert Major were charged with securities fraud violations after allegedly defrauding California school system employees with high-risk investments.

Source: Jdsupra.com, December 2021

IRS Expects 403b Plan Sponsors to Collect Information About Employees' Outside Employment

In a recent "Issue Snapshot" about how the annual limit on retirement plan contributions under Section 415(c) of the Internal Revenue Code applies to 403b plans, the IRS revealed that it expects 403b plan sponsors to maintain procedures to inform employees about Section 415(c)'s special aggregation rule for 403b plans and to collect information from employees about outside employment and retirement plan contributions.

Source: Verrill-law.com, December 2021

DOL Guidance on Cybersecurity: A Cautionary Note for Plan Sponsors

The DOL's cybersecurity best practices for plans covered by ERISA makes it clear that plan sponsors, service providers, and participants share responsibility for protecting plan accounts. The adoption and implementation of ERISA cybersecurity policies and procedures will be your best defense against fiduciary litigation and DOL investigations, which are certain to arise in the wake of the DOL's guidance. Here are some tips.

Source: Troutman.com, December 2021

A Compendium of Findings About the Retirement Outlook of U.S. Workers

Since 1998, Transamerica Center for Retirement Studies has conducted this national survey of U.S. business employers and workers regarding their attitudes toward retirement. The overall goals for the study are to illuminate emerging trends, promote awareness, and help educate the public. It has grown to be one of the longest-running and largest national surveys of its kind. This document is 320-pages.

Source: Transamericainstitute.org, December 2021

CITs, Retirement Income Products and ESG Investing Poised for Growth

As registered investment adviser aggregator firms continue to acquire smaller players in the defined contribution space, investment managers are starting to take notice of their growing influence in deciding DC plan investments, a recent study suggests. There has been a shift in distribution dynamics as many RIA firms look to centralize their investment analysis and research.

Source: Plansponsor.com, December 2021

DOL Seeks Information From Alight Solutions About Cybersecurity Incidents

Alight has been sued by retirement plan participants whose accounts were hacked, and the Department of Labor is investigating the provider's practices.

Source: Planadviser.com, December 2021

The 2022 Retirement Legislation Landscape Takes Shape

For much of 2021, the relative flurry of retirement plan-related legislative activity had experts feeling hopeful that much-needed progress was right around the corner. More recently, however, industry advocates' hopes for such retirement reforms being passed as part of the ongoing federal budget negotiations have mostly been dashed. Retirement reforms may have to wait for 2022.

Source: Planadviser.com, December 2021

TCRS Study Suggests Substantial Retirement Risks Remain

While most U.S. workers say they are saving for retirement through employer-sponsored plans or other means, a much smaller percentage say they are "very confident" they will be able to retire fully and comfortably. According to findings on the retirement outlook of U.S. Workers from the Transamerica Center for Retirement Studies, more than four out of five workers (82%) say they are saving for retirement through their current employer's 401k or similar plan and/or outside of work.

Source: Napa-net.org, December 2021

Adidas Kicks Excessive Fee Suit

A federal judge has dismissed an excessive fee suit that "contains no factual allegations surrounding defendant's process for selecting and monitoring investments." More precisely, Judge Karin J. Immergut of the U.S. District Court for the District of Oregon granted the Adidas fiduciary defendants' motion to dismiss the case.

Source: Napa-net.org, December 2021

DOL Continues Emphasis on Enforcement in 2021

The DOL's Employee Benefits Security Administration issued its enforcement fact sheet showing that it recovered $1.9 billion from its investigations during the fiscal year ended September 30th, 2021, underscoring that enforcement remains an important priority for the agency. This is the third consecutive year that EBSA's recoveries from investigations totaled almost $2 billion and that total recoveries totaled almost $2.5 billion.

Source: Groom.com, December 2021

IRS Issues Required Amendments List for Individually Designed Plans

On November 30, 2021, the IRS released Notice 2021-64 containing the 2021 required amendments list. This annually issued list describes changes in retirement plan qualification requirements and amendment deadlines for individually designed qualified and individually designed 403b plans. Some items require plans to be amended, while others do not. This article lists the changes to qualification requirements.

Source: Ascensus.com, December 2021

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